N.J. Stat. tit. 17, ch. 37A

in effect

N.J. Stat. § 17:37A-1 Policy declaration for mandatory program of essential insurance

1. It is hereby declared that an adequate market for fire and extended coverage insurance, including mine subsidence insurance, is necessary to attract and retain private capital in central city areas, and various other areas of the State; that without such insurance it is impossible to supply needed goods and services, and expand job opportunities; that orderly community development depends upon an adequate supply of such insurance to enable homeowners to obtain financing for the purchase and improvement of their property; that while the need for such insurance is growing there is reason to believe that the market for same is constricting, and likely to become more constricted in the future; that voluntary efforts to provide fire and extended coverage insurance, including mine subsidence insurance, in areas likely to be unprofitable deserve praise, but are insufficient to meet the needs of these areas; that the State has an obligation to require every insurance company writing fire and extended coverage insurance in New Jersey to meet its public responsibilities, instead of shifting the entire burden to a few public spirited companies; that it is the purpose of this act to accept this obligation; and that any mandatory program to provide fire and extended coverage insurance, including mine subsidence insurance, for all citizens of New Jersey should be supervised by the Commissioner of Insurance and periodically reviewed in the light of experience and intervening events by the Legislature. L.1968,c.129,s.1; amended 1994,c.143,s.1.

N.J. Stat. § 17:37A-2 Definitions

2. As used in this act, the following words and terms shall have the following meanings, unless the context indicates or requires another or different meaning or intent: (a) "Essential property insurance" means insurance against direct loss to property as defined and limited in the standard fire policy and extended coverage endorsement thereon, as approved by the commissioner, and insurance for such types, classes, and locations of property against the perils of vandalism, malicious mischief, burglary, or theft, or mine subsidence, or such other classes of insurance as the commissioner may designate in order to comply with federal legislation and obtain federal reinsurance; (b) "Basic property insurance" means insurance against loss to property as defined and limited in: the standard fire policy and extended coverage endorsement thereon, the allied line policy or endorsement, the homeowners' multiple peril policy, the commercial multiple peril policy, the burglary or theft coverage policy, the mine subsidence policy and other like policies; (c) "Association" means the New Jersey Insurance Underwriting Association established pursuant to the provisions of this act; (d) "Plan of operation" means the plan of operation of the association approved or promulgated by the commissioner pursuant to the provisions of this act; (e) "Insurable property" means real property at fixed locations in urban areas in this State, or the tangible personal property located thereon, but shall not include insurance on automobile and farm risks, with an insurable value not in excess of the limits provided in the plan of operation of the association and in no event more than $1,500,000.00, which property is determined by the association, after inspection and pursuant to the criteria specified in the plan of operation to be in an insurable condition; provided, however, that neighborhood, area, location, environmental hazards beyond the control of the applicant or ownership of the property shall not be considered in determining insurable condition; (f) "Commissioner" means the Commissioner of Insurance of New Jersey; (g) "Net direct premiums" means gross direct premiums (excluding reinsurance assumed and ceded) written on property in this State for fire and extended coverage insurance, including the fire and extended coverage components of homeowners and commercial multiple peril package policies, as computed by the commissioner, less return premiums upon canceled contracts, dividends paid or credited to policyholders or the unused or unabsorbed portions of premium deposits; (h) "Urban area" means any municipality or other political subdivision (1) which the Secretary of the United States Department of Housing and Urban Development has approved as eligible for an urban renewal project after a local public agency has been formed in that community to avail itself of a United States Housing and Urban Renewal Program or (2) designated by the association with the approval of the commissioner or (3) which the commissioner may designate; (i) "Mine subsidence" means lateral or vertical ground movement resulting from the collapse of man-made underground mines, including, but not limited to, coal mines, clay mines, limestone mines, slate mines, iron ore mines, and other metal or ore mines, which directly damages structures. "Mine subsidence" does not include lateral or vertical ground movement caused by earthquake, landslide, volcanic eruption, soil conditions, soil erosion, soil freezing and thawing, improperly compacted soil, construction defects, roots of trees and shrubs or collapse of storm and sewer drains and rapid transit tunnels; (j) "Mine subsidence insurance" means insurance against loss to an insured structure caused by mine subsidence; (k) "Structure" means, for purposes of subsections (i) and (j) of this section, any dwelling, building or fixture permanently affixed to realty located in this State including driveways, sidewalks, parking lots, basements, footings, foundations, septic systems and underground pipes directly servicing the dwelling or building. "Structure" does not include land, trees, plants, crops or agricultural field drainage tile. L.1968,c.129,s.2; amended 1969, c.84, s.1; 1994,c.143,s.2.

N.J. Stat. § 17:37A-3 Creation of association; membership

There is hereby created the New Jersey Insurance Underwriting Association, consisting of all insurers authorized to write and engaged in writing within this State, on a direct basis, property insurance. Every such insurer shall be a member of the association and shall remain a member so long as the association is in existence as a condition of its authority to continue to transact such kinds of insurance in this State. L.1968, c. 129, s. 3, eff. July 1, 1968.

N.J. Stat. § 17:37A-4 Powers

The association shall, pursuant to the provisions of this act and the plan of operation, and with respect to essential property insurance on insurable property, have the power, on behalf of its members: a. To cause to be issued policies of insurance to applicants; b. To assume reinsurance from its members; c. To cede reinsurance. L.1968, c. 129, s. 4, eff. July 1, 1968.

N.J. Stat. § 17:37A-5 Board of directors; election or appointment

The association shall be governed by a board of 21 directors, 10 of whom shall be elected annually by the members of the association, whose votes in such election shall be weighted in accordance with each member's participation in the association pursuant to section 6 of this act. One of whom shall be appointed annually by the commissioner from and among the officers of the various domestic mutual insurance companies, and one of whom shall be appointed annually by the commissioner from among the officers of the various domestic stock insurance companies. Six of whom shall be appointed annually by the commissioner from the public-at-large and who shall be individuals who are not employed by, or otherwise affiliated with, insurers, insurance agents, brokers, producers, or other entities of the insurance industry. In addition there will be three nonvoting members, one from the Independent Insurance Agents Association, one from the Professional Insurance Agents Association, and one from the Insurance Brokers' Association, or their successor organizations, each of whom shall be delegated by their respective associations to serve annually. Each of the six public members appointed by the commissioner shall be entitled to a per diem stipend of $100.00 for each day of board business attended, to be paid by the association. In addition, all board members, both voting and nonvoting shall be reimbursed by the association for all reasonable travel expenses incurred in connection with attendance at board meetings. L.1968, c. 129, s. 5, eff. July 1, 1968. Amended by L.1971, c. 395, s. 1, eff. Jan. 10, 1972; L.1981, c. 232, s. 1.

N.J. Stat. § 17:37A-6 Writings, expenses, profits and losses; participation by members

All members of the association shall participate in its writings, expenses, profits and losses in the proportion that the net direct premiums of each such member (but excluding that portion of premiums attributable to the operation of the association) written in this State during the preceding calendar year bear to the aggregate net direct premiums written in this State by all members of the association, as certified to the association by the commissioner after review of annual statements, other reports and any other statistics the commissioner shall deem necessary to provide the information herein required, and which the commissioner is hereby authorized and empowered to obtain from any member of the association. Each member's participation in the association shall be determined annually pursuant to the provisions of this section. No member shall be obligated in any 1 year to reimburse the association on account of its proportionate share in the deficit from operations of the association in that year in excess of 5% of its surplus to policyholders and the aggregate amount not so reimbursed shall be reallocated among the remaining members in accordance with the method of determining participation prescribed in this section, after excluding from the corporation the total net direct premiums of all members not sharing in such excess deficit. In the event that the deficit from operations allocated to all members of the association in any calendar year shall exceed 1% of their respective surplus to policyholders, the amount of such deficit shall be allocated to each member in accordance with the method of determining participation prescribed in this section. Any insurer authorized to write and engaged in writing any insurance, the writing of which requires such insurer to be a member of the association, pursuant to the provisions of section 3 of this act, who is authorized to write and engages in writing such insurance after the effective date of this act, shall become a member of the association on the January 1 immediately following such authorization, and the determination of any such insurer's participation in the association shall be made as of the date of such membership in the same manner as for all other members of the association. L.1968, c. 129, s. 6, eff. July 1, 1968. Amended by L.1973, c. 210, s. 1, eff. Aug. 2, 1973.

N.J. Stat. § 17:37A-7 Proposed plan of operation; provisions; review and approval; amendments; annual review

a. Within 90 days after the effective date of this act, the directors of the association shall submit to the commissioner, for his review and approval, a proposed plan of operation. Such proposed plan shall provide for economical, fair and non-discriminatory administration, and for the prompt and efficient provision of essential property insurance to promote orderly community development. Such proposed plan shall include: preliminary assessment of all members for initial expenses necessary to commence operations; establishment of necessary facilities; management of the association; assessment of members to defray losses and expenses; underwriting standards; procedures for acceptance and cession of reinsurance; procedures for determining amounts of insurance to be provided; time limits and procedures for processing applications for insurance; and such other provisions as may be deemed necessary by the commissioner to carry out the purposes of this act. b. The proposed plan shall be reviewed by the commissioner and approved by him if he finds that such plan fulfills the purposes provided by section 1 of this act. In his review of the proposed plan the commissioner may, in his discretion, consult with the directors and other members of the association and any other individual or organization. If the commissioner approves the proposed plan he shall certify such approval to the directors and said plan shall take effect 10 days after such certification. If the commissioner disapproves all or any part of the proposed plan of operation he shall return same to the directors with a statement, in writing, of the reasons for his disapproval and any recommendations he may wish to make. The directors may accept the commissioner's recommendations, or may propose a new plan, which accepted recommendations or a new plan shall be submitted to the commissioner within 30 days after the return of a disapproved plan to the directors. If the directors do not submit a proposed plan of operation within 90 days after the effective date of this act, or a new plan which is acceptable to the commissioner, or accept the recommendations of the commissioner within 30 days after the disapproval of a proposed plan, the commissioner shall promulgate a plan of operation and certify same to the directors. Any such plan promulgated by the commissioner shall take effect 10 days after certification to the directors; provided, however, that until a plan of operation is in effect pursuant to the provisions of this act, any existing temporary placement facility shall be continued in effect on a mandatory basis on such terms as the commissioner shall determine. c. The directors of the association may, on their own initiative, amend the plan of operation at any time, subject to the approval by the commissioner. d. The commissioner may review the plan of operation whenever he deems expedient, and shall review same at least once a year, and may amend said plan after consultation with the directors and upon certification to the directors of such amendment. L.1968, c. 129, s. 7, eff. July 1, 1968.

N.J. Stat. § 17:37A-8 Essential property insurance; application; contents; denial; appeal

a. Any person having an insurable interest in insurable property, who has failed to procure essential property insurance from an authorized insurer in the normal insurance market, shall, on or after the effective date of the plan of operation, be entitled to apply to the association for such coverage and for an inspection of the property. Such application may be made on behalf of an applicant by a broker or agent authorized by him. Every such application shall be submitted on forms prescribed by the commissioner after consultation with the directors of the association and shall contain information sufficient to indicate: (1) Evidence of failure to procure essential property insurance from an authorized insurer in the normal insurance market; (2) Whether or not the property is insurable; (3) Whether or not there is any unpaid, uncontested premium due from the applicant for prior insurance on the property (as shown by the insured having failed to make written objection to charges within 30 days after billing). The term "insurable interest," as used in this section, shall be deemed to include any lawful and substantial economic interest in the safety or preservation of property from loss, destruction or pecuniary damage. b. If the association determines that: (1) The applicant has made a diligent effort to procure essential property insurance from an authorized insurer in the normal market at manual or tariff rates; (2) The property is insurable; and (3) There is no unpaid, uncontested premium due from the applicant for prior assurance on the property, the association, upon receipt of the premium, or such portion thereof, as is prescribed in the plan of operation, shall cause to be issued a policy of essential property insurance for a term of 1 year. Any policy issued pursuant to the provisions of this section shall be renewed annually, upon application therefor, so long as the information contained in the original application remains valid. c. If the association, for any reason, denies an application and refuses to cause to be issued an insurance policy to any applicant, or takes no action on an application within the time prescribed in the plan of operation, any such applicant may appeal to the commissioner, and the commissioner, after a review of the facts may direct the association to cause to be issued an insurance policy to the applicant. In carrying out his duties pursuant to this section the commissioner may request, and the association shall provide, any information he deems necessary concerning the reasons for the denial or delay of an application. L.1968, c. 129, s. 8, eff. July 1, 1968.

N.J. Stat. § 17:37A-9 Ceding insurance to association

Any member of the association may cede to the association essential property insurance written on insurable property, to the extent, if any, and on the terms and conditions set forth in the plan of operation. L.1968, c. 129, s. 9, eff. July 1, 1968.

N.J. Stat. § 17:37A-10 Rates, rating plans and rating rules

a. The rates, rating plans and rating rules applicable to the insurance written by the association, shall be in accord with the manual or traffic rates in current usage. L.1968, c. 129, s. 10, eff. July 1, 1968.

N.J. Stat. § 17:37A-11 Appeal

Any person insured pursuant to this act, or his representative, or any affected insurer, may appeal to the commissioner within 30 days after any ruling, action or decision by or on behalf of the association, with respect to those items of the plan of operation which the commissioner defines as appealable matters. L.1968, c. 129, s. 11, eff. July 1, 1968.

N.J. Stat. § 17:37A-12 Orders of commissioner; review

All orders of the commissioner made pursuant to this act shall be subject to review by the Superior Court in a proceeding in lieu of prerogative writ. L.1968, c. 129, s. 12, eff. July 1, 1968.

N.J. Stat. § 17:37A-13 Reports of inspection

All reports of inspection performed by or on behalf of the association shall be made available to members of the association, applicants and the commissioner. L.1968, c. 129, s. 13, eff. July 1, 1968.

N.J. Stat. § 17:37A-14 Liability for statements in reports or communications

There shall be no liability on the part of, and no cause of action of any nature shall arise against, the association or its agents or employees, an insurer or the commissioner or his authorized deputies, for any statements made in good faith by them in any reports or communications concerning risks insured or to be insured by the association or at any administrative hearings conducted in connection therewith. L.1968, c. 129, s. 14, eff. July 1, 1968.

N.J. Stat. § 17:37A-15 Association's annual statement; contents, form

15. The association shall file with the Governor, the commissioner and the New Jersey Senate and General Assembly, annually on or before March 1, a statement which shall contain information with respect to its transactions, condition, operations and affairs during the preceding year. Such statement shall contain such matters and information as are prescribed by the commissioner, and shall be in such form as is approved by him. The commissioner may at any time require the association to furnish him with additional information with respect to its transactions, condition or any matter connected therewith, which he considers to be material and which will assist him in evaluating the scope, operation and experience of the association. L.1968,c.129,s.15; amended 1991,c.394,s.1.

N.J. Stat. § 17:37A-16 Examination into affairs; hearings; expenses

The commissioner may make an examination into the affairs of the association whenever he deems it expedient, and in undertaking any examination he may hold a hearing or hearings pursuant to the procedures provided in chapter 1 of this Title. The expenses of every such examination shall be borne and paid by the association, but the commissioner may, in his discretion, for good cause shown, remit such charges. L.1968, c. 129, s. 16, eff. July 1, 1968.

N.J. Stat. § 17:37A-18 New Jersey insurance development fund; purpose; administration

There is hereby created a fund to be known as the "New Jersey Insurance Development Fund," for the purpose of providing a financial backup for the plan of operation of the association as approved or issued by the commissioner pursuant to this act. The fund shall be used to reimburse any insurer or the association established pursuant to this act for losses sustained in excess of the amount of retention of such losses as shall be provided for by the commissioner; except that in any given calendar year the total amount of all such reimbursement shall not exceed 5% of the insurance premiums written on basic property insurance in this State in the most recent full calendar year. The fund shall consist of all payments made to the fund by insurers as hereinafter provided, of securities acquired by and through the use of moneys belonging to the fund, moneys appropriated to the fund as provided in this act, together with interest and accretions earned upon such payments or investments. The fund shall be administered by the commissioner and the State Treasurer in accordance with the provisions of this act. L.1968, c. 129, s. 18, eff. July 1, 1968. Amended by L.1977, c. 185, s. 1, eff. Aug. 22, 1977.

N.J. Stat. § 17:37A-19 Privilege of doing business; surcharge upon premiums

For the privilege of doing property insurance business in this State, and in addition to all other requirements of law, every insurer authorized to write such insurance in this State shall be obligated to collect from the insured under any policy of basic property insurance, a surcharge upon the premium paid for said policy in an amount which shall be annually determined by the commissioner as hereinafter provided. This surcharge shall be collected by each insurer and paid over to the fund semiannually as provided for by the commissioner. L.1968, c. 129, s. 19, eff. July 1, 1968.

N.J. Stat. § 17:37A-20 Establishment of fund; surcharge upon basic property insurance premiums; maximum

For the purpose of providing the moneys necessary to establish the New Jersey Insurance Development Fund in an amount sufficient to meet the requirements of said fund pursuant to section 21 of this act, the commissioner shall establish a reasonable surcharge upon all basic property insurance premiums paid for policies of insurance written in this State; provided, however, that in any given calendar year the aggregate amount of such surcharges shall not exceed a sum equal to 5% of the insurance premiums written on basic property insurance in this State in the most recent full calendar year. The surcharge shall be a separate charge to the insured in addition to the premium to be paid and shall be reflected as such in the policy and commissions shall not be payable thereon. The insurer shall be prohibited from absorbing such surcharge as an inducement for insurance or for any other reason. In the event that pursuant to section 23 of this act the Legislature appropriates any moneys to the credit of such fund, the commissioner is hereby empowered to increase the surcharge so that the amount so appropriated may be returned to the State Treasury as provided by section 23 of this act. L.1968, c. 129, s. 20, eff. July 1, 1968. Amended by L.1977, c. 185, s. 2, eff. Aug. 22, 1977.

N.J. Stat. § 17:37A-21 Net value of fund; determination; amount

The commissioner, on or before April 1, shall ascertain and determine the net value of the fund as of the next preceding December 31. The net value of the fund shall be determined by deducting from the value of the assets of the fund, the aggregate, actual, and estimated liabilities of the fund as determined by the commissioner. When the net value of the fund, as thus determined, reaches an amount equal to 5% of the premiums written on basic property insurance in this State in the most recent full calendar year, no further surcharge on said premiums and no further payments to said fund shall be made; provided, however, that whenever, thereafter, the net value of said fund shall be reduced below the aforesaid amount, by reason of payments from and known and estimated liabilities of such fund, then such surcharge and payments to said fund shall be received in the manner provided in section 19 of this act, and shall continue in such manner until said fund, over and above its sum and estimated liabilities, shall reach the aforesaid amount. L.1968, c. 129, s. 21, eff. July 1, 1968. Amended by L.1977, c. 185, s. 3, eff. Aug. 22, 1977.

N.J. Stat. § 17:37A-22 Custodian of fund; disbursements; investments

The fund created by this act shall be separate and apart from any other fund and from all other State moneys. The State Treasurer shall be the custodian of said fund; and all disbursements from said fund shall be made by the treasurer upon vouchers signed by the commissioner, as in this act provided. The moneys of said fund shall be invested and reinvested by the Director of the Division of Investment as other trust funds in the custody of the State Treasurer in the manner provided by law. L.1968, c. 129, s. 22, eff. July 1, 1968.

N.J. Stat. § 17:37A-23 Insufficiency of fund to pay claims; appropriation

If in any year or at any time the fund as hereinabove established is insufficient to pay claims chargeable to the fund to the extent of 5% of the most recent full calendar year basic property insurance premiums written by authorized insurers in this State, the commissioner shall certify to the Governor the amount of such insufficiency and such amount shall be appropriated and paid to the fund, which said amount so paid shall be returned to the treasury of this State from proceeds of the surcharge collected pursuant to this act. L.1968, c. 129, s. 23, eff. July 1, 1968. Amended by L.1977, c. 185, s. 4, eff. Aug. 22, 1977.

N.J. Stat. § 17:37A-24 Entry upon lands for examination

The agents and employees of any insurer of this State participating in a plan established pursuant to this act may enter upon any lands and premises in the State for the purpose of making such examination as is necessary or convenient for the purposes of this act and such entry shall not be deemed a trespass, except that the insurer shall make reimbursement for any actual damages resulting to such lands and premises as a result of such activity. L.1968, c. 129, s. 24, eff. July 1, 1968.

N.J. Stat. § 17:37A-25 Federal programs of reinsurance; participation

In addition to any powers conferred upon him by this or any other law, the commissioner is authorized to do all things necessary to enable this State and any insurer participating in any plan approved or issued by the commissioner to fully participate in any Federal program of reinsurance which may be hereafter adopted for purposes similar to the purposes of this act. L.1968, c. 129, s. 25, eff. July 1, 1968.

N.J. Stat. § 17:37A-26 Rules and regulations

The commissioner may make reasonable rules and regulations to carry out the purposes of this act. L.1968, c. 129, s. 26, eff. July 1, 1968.

N.J. Stat. § 17:37A-27 Reports from insurers concerning risks

The commissioner may require such reports from insurers concerning risks insured under any plan approved or issued pursuant to this act as he shall deem necessary. L.1968, c. 129, s. 27, eff. July 1, 1968.

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